Dave Inc. Reports Record Revenue and Positive Outlook

Dave Inc. ((DAVE)) has held its Q1 earnings call. Read on for the main highlights of the call.

Dave Inc.’s recent earnings call conveyed a predominantly positive sentiment, underscored by remarkable growth in revenue, ARPU, and membership base. The company has made significant strides in improving credit performance, thanks to a new fee structure and strategic partnerships. Despite facing challenges such as increased customer acquisition costs, ongoing litigation with the DOJ, and higher credit loss provisions, the overall tone remained optimistic due to the strong financial performance and strategic advancements.

Record-Breaking Revenue and Growth

Dave Inc. reported a record high total revenue of $108 million, marking a 47% year-over-year increase. The company also achieved an impressive 235% growth in adjusted EBITDA, reaching $44.2 million, which is the largest dollar increase in its history. This financial milestone reflects the company’s robust growth trajectory and operational efficiency.

Improved Credit Performance and Delinquency Rates

The company’s credit performance showed notable improvement, with the 28-day delinquency rate decreasing by 33 basis points or 18% year-over-year to 1.5%. This improvement highlights the effectiveness of the CashAI underwriting engine, which has been instrumental in enhancing credit quality.

Expansion in Member Base and ARPU

Dave Inc. experienced a 15% year-over-year growth in its total member base, reaching 12.4 million members. Additionally, the average revenue per user (ARPU) expanded by 29% year-over-year, marking the seventh consecutive quarter of double-digit ARPU growth, indicating strong customer engagement and monetization.

Positive Impact of New Fee Structure

The transition to a new fee structure has yielded better-than-expected results in conversion, retention, and monetization. This strategic move has significantly enhanced member lifetime value, demonstrating the company’s ability to adapt and optimize its revenue model effectively.

Successful Strategic Partnership Transition

Dave Inc. has successfully transitioned its strategic partnership with Coastal Community Bank, which will bolster its ExtraCash and banking products. This partnership is expected to enhance the company’s ability to launch new products, further strengthening its market position.

Increased Customer Acquisition Cost (CAC)

The company reported a 13% year-over-year increase in customer acquisition cost (CAC) during the first quarter, attributed to strategic refinements in marketing. However, this increase was offset by a higher member lifetime value, indicating a balanced approach to growth and profitability.

Litigation with the Department of Justice

Dave Inc. is currently involved in ongoing litigation with the Department of Justice. A motion to dismiss the lawsuit has been filed, and a ruling is anticipated in the third quarter. This legal challenge remains a point of concern for the company.

Provision for Credit Losses Increase

The provision for credit losses increased by 7% year-over-year to $10.6 million, primarily due to increased origination volumes. This rise reflects the company’s expanding lending activities and the associated risks.

Forward-Looking Guidance

Looking ahead, Dave Inc. has announced robust projections for fiscal year 2025, with expectations of continued strong performance. The company has raised its full-year guidance for revenue to $460-$475 million and adjusted EBITDA to $155-$165 million. These projections are supported by a 13% rise in monthly transacting members and a 29% boost in ARPU, alongside significant growth in ExtraCash originations and Dave Card spending.

In summary, Dave Inc.’s earnings call highlighted a positive outlook, driven by record-breaking revenue growth, improved credit performance, and strategic partnerships. Despite facing challenges such as increased customer acquisition costs and ongoing litigation, the company remains optimistic about its future prospects, as reflected in its raised guidance for fiscal year 2025.